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You may have seen several of your friends flourishing, but some others failing and some tasting limited success. This article is intended to highlight some of the aspects one needs to take care of while starting and running a business of any kind.
Highlighted here are the general guidelines and not necessarily the only ones to be followed. Depending on the situations and type of businesses few additional aspects may have to be considered to make them fully successful. A common sense approach in several situations during the course of doing business comes in handy to keep it afloat and to grow.
1. Why venture into business?
What makes business click for some but not for others? Many people are not cut out for business, but are good at working for a company by steadily climbing up the corporate ladder and reaching higher positions like VP, MD etc. These people are good in what they do.
Their mind set does not allow them to independently work from scratch and going up all the way in business passing through several rigors in the process. They feel secure in the present job, don’t want to leave the comforts they have already earned in their position, don’t want to take risks, are comfortable with the feeling that several people report to them, status conscious and are happy rubbing shoulders with the likes of them.
It is best for them to continue to do what they are doing. People who start an independent business are the ones who cannot work under his boss beyond a certain period or level, highly independent, want to have a lot freedom to think and execute their own ideas and plans and take pride in achieving things on their own.
2. Is money single motivator for you to be in business?
You have to be honest in answering this question. Yes there is money to be made in business. But that alone cannot be the criteria to enter a business. You have to have a passion to work alone, patience and perseverance to build up the business brick by brick, be prepared to face highs and lows, especially lows, shed your ego and be ready to approach even the lowest level person in an organisation and at the same time comfortable to talk to higher ups at the proper time in the of process of getting orders since the initiator as well as the decision maker play important roles in giving you the order.
3. Are you in the Right Business?
Have you considered all the aspects like, potential for the product or service, price that it commands in the market and therefore the margin, marketability, costs involved in marketing etc. Just because your friend has succeeded in marketing a product or service is not enough reason for you to be in the same business. What works for him need not necessarily work for you.
4. Core competence
It is always better for you to start a business in a field in which you have experience. Because, then, you know the nuts and bolts of it, namely where to source your raw materials or products, the manufacturing costs if you intend to manufacture, your competitors, their pricing in the market place and therefore the margin you can expect, your target customers, problems you are likely to encounter etc. The probability of success in this case is likely to be much higher.
If, for example, you have experience in marketing, you may wish to engage the services of a few people specialised in other areas to help you in business. Similarly if you are a technically oriented person, you may need assistance in the area of financial management, marketing etc. In the event you are starting business in an unknown market, the learning curve could be longer, some times 3 to 6 years- before you taste success. So, one needs to assess his sustainability in that case and be prepared to wait that much longer.
5. Skill sets required
You should possess or be prepared to acquire the skills required for your business. While there are some general skill sets required for any business, there may be some special skills like technical knowledge related to that business which an entrepreneur has to acquire quickly by taking some special training outside.
There may be several initial failures, like you have not convinced the client enough, you have been over ambitious in pricing and competition has been faster than you and several such factors. You should thank that such failures have occurred early enough since they give you an opportunity to analyse and learn form such mistakes so that you become more mature and do not repeat those mistakes.
The immediate reaction for any one in such a situation is to despair and get discouraged, especially so if people surrounding you say “I told you in the beginning itself not to venture into business.” One has to have patience and perseverance to continue what he is doing with a new vigour. It is easily said than experienced.
Some times small orders initially will be good enough even at a loss or at cost because such order help you build up a client base and useful as “word of mouth” referral for several future orders. Another reason for taking such orders is some for strategic reasons viz their potential is high in future. These customers want to test your product quality and your service before they give you any big order.
6. Other important Factors
If you start in a small way, you need not splash money in advertising and other promotional avenues. You have to identify your target clients and collect data base of such clients before working out a sales strategy. There are several agencies who sell data bases. Telephone directory is one source from where you can generate a reasonably good data base.
It is always advisable and proper to restrict and focus your efforts in a small territory initially to make sure you taste succeeds and experience all pitfalls so that you correct them before you spread your efforts in other territories. Once you have built up an initial data base, you can then decide on the avenue for marketing such as direct mailer, calling by telephone, SMS campaign and email campaign etc
These help you to build a prospect base for further follow up in closing the orders. You have to be careful about your delivery commitments and adhere to such commitments. A few courtesy calls/visits after delivering the products periodically will increase customer confidence in you and building a lasting relationship which may result in repeat orders. Such customers can also act as referral for getting new customers since word of mouth plays an important role in business growth.
Innovative thinking
You have to all the time think of innovative ways to enhance product features, expanding customer base, entering new segments etc. This is required to ensure that your business does not shrink in volume any time but keeps growing. On the one hand you have to build a brick wall around the existing customer by constantly nurturing them while on the other hand you have to keep your eyes open for new business avenues and new customers.
Do no forget the old saying that it costs six to ten times more to develop a new customer than to service an existing one. If at a later date you feel that advertising can help your business growth, you have to carefully evaluate each channel of advertising like print media, visual media, internet banners etc, to find out which avenue will get you best return for each rupee spent.
If you have employed people to carry out production, sale etc, it is important to motivate them every now and then to get the best out of them. Money is only one of the motivating factors. Working along with them in a group, guiding them to do their job right and ultimately giving them the credit will go a long way in nurturing and expanding your business.
(The writer is ex-marketing manager of a private company. Has 30 years of marketing experience.)